Making the most of a lump sum

You have a lump sum in cash… so what do you do with the money? Good financial advice can help you decide how to best use what could be a once in a lifetime sum.

Depending on how you ended up with your lump sum – perhaps a business sale or inheritance – you may have some tax to pay, but once this has been settled what you should do with the money depends upon your needs and goals.

If you’re going to spend it all in less than 5 years, you should probably keep it in cash, because investing for very short periods is akin to the flip of a coin in terms of whether you’ll be better or worse off at the end.

The longer you invest the better your chances of making real returns, and the impact of short term market volatility on your capital are diminished. So if you can put some or all of it aside for 5 years or more, depending on your personal circumstances, investing could be a good option.

Some of the key things we’ll help you to consider are:

  • Do you need to draw on the money immediately, or at some point in the future? How much do you need to meet spending? Over what timeframe?
  • Do you have debts? If so, depending on what they are, you should consider paying them off.
  • If you plan to live off the capital – is it enough for you to stop working? If so, what investment return do you need to achieve over the long term?
  • If you are going to invest, how could you do this tax efficiently, both in the short and longer term?
  • When looking at your assets as a whole, are they diversified or do you have ‘all of your eggs in one basket’?
  • What access do you need to the capital going forward?
  • How does the receipt of the capital affect your Inheritance Tax Situation?
  • Is there anyone else you are looking after that needs to be built in to your plan?

If we feel we can add value after an initial discussion at our expense, to get a feel for your circumstances and objectives, we’ll provide you with a Scope of Work. This will detail the services & tasks we feel you’ll benefit from, and the fee you’ll pay.

If you are interested in investing a lump sum and would like to chat this through, get in touch and we can take it from there.

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